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Indian Real Estate News
SENTIMENT SURGES IN SECTOR
Source: The Times of India Aug 01, 2014
As sentiment in the real estate sector has started looking up, builders and investors are expecting prices to start improving by Diwali.

Knight Frank and FICCI in their June quarter Real Estate Sentiment Index said that while residential launches and sales will continue the good run, prices are expected to go up during the second half of 2014.

According to the survey, current and future sentiments reflect high degree of optimism in the real estate sector. The index is developed after surveying a large number of stakeholders in the sector. At the same time, according to the latest report by MagicBricks, a leading property portal in the country, demand has grown in Noida, Gurgaon, and Ghaziabad. While supply matched demand in Noida and Gurgaon, supply lagged demand by 11% in Ghaziabad.

Interestingly, the MagicBricks report said that in almost all the cities in India, at least a quarter of the citywise demand was for the Rs 30-50 lakh category houses, showing that the middle class remained active and willing to buy .

Developers also maintain that deals have started picking up in the affordable segment. In July particularly, end users and investors have bought properties in areas like Ya muna Expressway, Greater Noida, NH-24, and Sohna Road. The Knight Frank and FICCI report said that sentiments are upbeat owing to expectations of faster decision-making and positive reforms.

The report said that the real estate sentiment has reached the highest level in the last three quarters. A majority of the stakeholders are bullish about the sector after the general election, especially after the maiden Budget of the NDA government, with the current and future sentiments depicting a significant upward trend.

The report said that although the future sentiment gained some momentum in the last quarter itself, the current score has decisively breached the 50 mark in the second quarter ending June 30, 2014, implying that stakeholders feel that the current market is also showing green shoots of recovery .

It said future sentiment scores have risen across all regions with the north being the most upbeat.

Developers and financial institutions are equally optimistic about the future of the sector. In fact stakeholders are bullish about the future, in view of the stable government at Centre and expect faster decision-making and reforms in the coming quarter. Apart from residential real estate, as new office supply remains under check, it will help office rentals strengthen in the coming months, the report said.

A Didar Singh, the secretary general of FICCI, says: “The optimism shared by real estate industry stakeholders about current and future sentiments in the real estate augurs well not only for the sector but also for Indian economy . The findings of this report corroborate the all round optimism in the economy seen as a result of the central government's resolve to push reforms through bold decisions. The recent Union Budget announcements for housing and real estate sector will further spur growth of this sector, as well as improve future sentiments of stakeholders.“

Shishir Baijal, the CMD of Knight Frank India, says: “The fact that political stability has a perceptible effect on the real estate sector is quite apparent from the optimism showcased by stakeholders after the elections. This optimism is broad-based and encompasses all regions and asset classes that include developers as well as financial institutions. Going forward, we expect these sentiments to continue remaining bullish in the subsequent quarters as well.“

Samantak Das, the chief economist and director of research, Knight Frank India, says: “With the backdrop of a stable government coupled with high expectations of faster decision-making and positive reforms, the respondents have shown positive outlook for the residential sector in terms of sales and launches. In fact, prices are also expected to go up in the coming six months. The office market, too, has exhibited similar trends with rental growth expected to strengthen on the back of high leasing volumes and limited supply of new office space.“

According to the first edition of MagicBricks's PropIndex for April-June 2014, the gap between demand and supply was limited to 3-4% in cities like Mumbai, Pune, and Delhi, while Gurgaon was the only city where demand and supply were almost evenly matched.

The highlight of PropIndex, however, was the drop in demand for affordable properties (budget range of up to Rs 20 lakh), which remained significantly low at the national level (1%).

Even at city level, demand in this category fluctuated between a modest 1-5%. As a result, supply in the segment led the existing demand in almost all cities, contrary to the industry buzz that the category is undersupplied and in greater demand, the MagicBricks report said.

In contrast, the demand for luxury properties priced at Rs 1 crore at the national level inched up.

However, even though demand has moved up, the luxury seg ment remains over-supplied in almost all cities, the MagicBricks report said. Noida, Gurgaon and Ghaziabad were the only exceptions. While in Noida and Gurgaon, supply matched demand in the category , in Ghaziabad supply lagged demand by 11%.

In Gurgaon, Sohna Road continued to be the most preferred residential destination, owing to commercial offices and large-scale residential development along the corridor.

According to the report, the maximum demand was registered for units worth Rs 1-2 crore, closely followed by properties worth Rs 60-100 lakh in the current quarter.
The demand in the budget range of Rs 60-100 lakh is in new developing areas like Sectors 81-95 and the residential pockets of Manesar.

In Noida, sectors along the Noida Expressway and the areas in its proximity like Sectors 82, 93A, 128, 137, and 143 recorded positive price movements.

Values either stayed stable or inched up by 1-5% in these sectors in the current quarter. Sectors 93A and B recorded the highest rise of 5% and 3%, respectively , in capital values during the April-June 2014, the MagicBricks report said.
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